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Depreciation, which is your preferred method?

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Willie

Senior Member
Joined
May 30, 2002
Professional Status
Certified General Appraiser
State
Tennessee
Been awile since we discussed depreciation. Seems like it was a good topic. I don't remember exactly what was said or what context it was said. Just thought this might be a good revist.

Which method do you prefer to use in estmating accrued depreciation? Why? Econ. Age Life? Modified Econ. Age Life? Breakdown? A blend? One way for some clients, another way for other clients?
 

Bobby Bucks

Elite Member
Joined
Jan 27, 2002
Professional Status
Real Estate Agent or Broker
State
North Dakota
William I prefer the Fannie Mae 2055 method. :)
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
If youse don't do a cost approach...then you don't need no stinkin method for depreciation. How about modified age/life method?
 

Will Trueheart

Sophomore Member
Joined
Feb 18, 2003
I use the mod. a/l method like Mike. I would think that any reasonable method consistently applied would provide reasonable results 8O
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Simple property, simple method
Complex property, a more complex method
one size does not fit all
 

John Hassler

Senior Member
Joined
Jul 23, 2002
Professional Status
Certified Residential Appraiser
State
California
I've got the M&S depreciation table posted on the wall.

John Hassler
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
Age-Life based on a 60 year life,
typically applied in 3 year increments.

So if the effective age is 3 years,
that's equivalent to 5% of RCN.

Its simple, its rational, you can
apply it consistently, and I can
explain it in court so even a
cross-examing attorney can understand.

elliott
 

Craig Sewell

Freshman Member
Joined
Feb 6, 2002
I begin with the market value I need, and then work backwards to determine the depreciation rate, cost/square foot, site value, etc. He he.
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
I prefer the extended life theory of loss as used in the M&S manuals. That's what they base their depreciation tables on. This theory of loss includes consideration not only of the physical and normal functional elements of loss to a structure, but also includes consideration of the effects of these elements within the context of the subject's market segment, something most other straight math-oriented methods miss. It goes like this:

Estimated Economic Life Span
- Est. Remaining Economic Life
Effective Age.

IMO, if you're going to use the M&S Depreciation tables, you should use the same emthod they do in its entirety. In the end, as long as they're used properly, the results of almost any of the recognized methods will be reasonable.


George Hatch
 

Fred

Elite Member
Joined
Jan 15, 2002
Professional Status
Retired Appraiser
State
Virgin Islands
"so even a cross-examing attorney can understand. "

I did not know there were cross-examining attorneys that would admit to understanding anything - except why something is a mistake. :D
 
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